Employee Motivation and Its Implications on Resource Allocation and Corporate Portfolio Management

The July-August 2008 issue of the Harvard Business Review has an article entitled "Employee Motivation: A Powerful New Model" authored by Nitin Nohria, Boris Groysberg, and Linda-Eling Lee which talks about, as the title implies, motivating employees and the drivers behind motivation. In it, the authors argue that there are four drives that underlie motivation and those are (directly quoted below):

The drive to acquire - obtain scarce goods including intangibles such as social status

The drive to bond - form connections with individuals and groups

The drive to comprehend - satisfy our curiosity and master the world around us

The drive to defend - protect against external threats and promote justice

One of the organizational dimensions that drives motivation and specifically the drive to defend is what the authors detail as "fair, trustworthy and transparent processes for performance management and resource allocation". They cite some corporate examples but the overarching theme is that their should be transparency in the resource allocation process and that while pet projects may get killed, employees need to understand the rationale behind the decision. Employees reporting that funding criteria and process are fair and transparent leads them to be motivated and to view the organization as a "just one."

Corporate portfolio management which is a discipline to more rigorously manage and optimize resource allocation is often discussed in terms of the financial and strategic outcomes it enables. The authors of the article hit upon an employee dimension which is often ignored or misunderstood in discussions of corporate portfolio management. When we work with clients, we often talk about creating "an internal marketplace for project and investment funding" and in some instances, this idea of competing for funding scares organizations because they worry that this will demotivate employees who are the project/investment originators or who may be working on such projects.

In actuality, this marketplace concept is empowering. Generally, resource allocation as it relates to project and investment selection is a game where people don't know the rules. And so people see projects/investment selections predicated on dubious, incomplete business cases or on the basis of relationships and decibel-driven (vs data driven) criteria. Imagine for a second that you are playing a game where the rules were unknown or always changing. It doesn't sound like a very fun game does it?

When employees know the "rules of the game" around resource allocation, this makes the process and the organization stronger and is motivating for employees. People come with their best ideas because they know those ideas are actually valued and have a shot at receiving funding. By knowing the rules of the resource allocation process, they understand what is considered an investment, what is needed for an investment to be considered for funding and they also understand the methods by which their projects will be evaluated and funded. Yes, there will be times when their projects don't get the funding they desire but at least they can feel comfortable that the process underlying the selection was fair.

Corporate portfolio management (or it's children in the form of IT portfolio management, project portfolio management) often fail to consider the organizational behavior that is required to make them happen. More often than not, they also fail to consider the beneficial behavioral outcomes which they can enable foremost amongst them is more motivated employees.

Anand Sanwal is the former Vice President, Investment Optimization and Strategic Business Analysis, at American Express where he built and led the company's corporate portfolio management effort managing several billion dollars per annum of discretionary investment spend. It is widely recognized as the most ambitious corporate portfolio management undertaking by a large- or mid-size corporation. He also oversaw the CFO's strategic planning group in addition to also leading the creation and management of the companyâ€™s inaugural $50MM Chairmanâ€™s Innovation Fund. He is the author of the book Optimizing Corporate Portfolio Management: Aligning Investment Proposals with Strategy. He is a founder of consulting & advisory company Brilliont.

He speaks and consults frequently with research organizations and companies on the topics of innovation, corporate portfolio management and cost optimization and has worked with leading financial services, pharma, high-tech, healthcare and public sector institutions. His work has been featured in Business Finance Magazine, BPM Magazine, The Journal of Accounting & Finance, Baseline Magazine and The Deal amongst others. He graduated from the Wharton School of Business with a degree in Finance and Accounting and also has a degree in Chemical Engineering from the University of Pennsylvania. More info can be found at Brilliont or at his personal website. He can be reached at asanwal@brilliont.com.

As you can probably tell, Anand also enjoys writing descriptions about himself in the third person.

He is also involved with Brilliont spin-off ChubbyBrain - the world's largest user-generated database of innovative startups. In addition to delivering intelligent, well-structured information on startups, ChubbyBrain also encourages its members to provide expert insights and critiques of emerging business models, technologies and companies. Presently, the platform has over 13,000 startups and over 900 investors (VCs, angel investment groups, corporate venture groups and individuals) in our database.

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Insights, pragmatic discussion, and conversation about corporate portfolio management, innovation and cost optimization as well as ...
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Insights, pragmatic discussion, and conversation about corporate portfolio management, innovation and cost optimization as well as general business hilarity. Whether you call it enterprise portfolio management, IT portfolio management, project portfolio management, investment optimization or some other term, efforts at optimizing your resource allocation are key to long term organizational success.
I abhor unproductive complexity and am wary of many of the purported elixirs out there (most software 'solutions', scorecards, dashboards).
The insights in this blog are the result of work in the trenches building what is regarded as one of the most successful corporate portfolio management disciplines within a large organization at American Express.
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